International Monetary Fund(IMF) Managing Director Christine Lagarde delivers remarks on the world's economy at the National Press Club on January 15, 2013, in Washington, DC. (AFP Photo / Paul J. Richards) / AFP

International Monetary Fund Director Christine Lagarde has urged the US to promptly increase its borrowing limit, and warned the Federal Reserve to carefully wind down its $75 billion bond-buying program, as the global economy is still very "fragile".

“It will be critical to avoid premature withdrawal of
monetary support and to return to an orderly budget process,
including promptly removing thedebt
ceilingthreat,” Lagarde said addressing an audience
at the National Press Club in Washington on Wednesday.

Lagarde also said global recovery was still “fragile”
and US policymakers needed to take this into account, especially
in winding down the $75-billion-per-month bond buying stimulus
program, which when removed, will have serious global economic
repercussions.

The Fed’s "easy
money" program has been pumping billions of dollars
into the economy, which propped up equities and markets after the
2008-2009 financial crisis.

On Wednesday the US House of Representatives House passed the
$1.1 trillion bipartisan spending bill, which guarantees the US
will have enough money to pay its bills and run the government
through September 30. The House approved the bill 359-67, and
next will be sent to the Senate for approval, and then President
Obama, both of which are expected to happen without fuss.

The two-year budget
agreement will hopefully usher in a new era of cooperation in
Congress, which has been viciously divided over raising the debt
ceiling to fund the budget.

This is Congress’s first budget deal since 2011, and has ended
months of political tug-of-war in Washington, which resulted in a
partial government shutdown for 16 days in October. The shutdown
cost the American economy an estimated $24 billion by rating
agency Standard & Poor's estimate, and sent waves of panic through
global markets.

After months of infighting between Democrats and Republicans over
increasing the debt ceiling to fund the budget, a deal seems to
be in place to avoid the February 7 deadline.

"We are all very pleased to see an orderly budget process is
back," Lagarde said.

Global Ripple

If the US missed the February 7th debt ceiling deadline, the
world’s largest economy would technically default and the global
financial system could enter a recession worse than
2008.

A US-default would “have financial consequences that will
apply not just to this country but across the globe,”
Lagarde said in October.

The outstanding debt of the world’s largest economy is currently
$17
trillion.

A lot of this debt is owned by other countries, in the form of
Treasury bonds, so a budget deal is good for everyone. China, for
example, holds $1.3
trillion of America's debt.

Worldwide, the IMF projects 3.6 percent economic growth in 2014,
a slightly more optimistic than the World Banks' 3.2 percent
expectation,
released Tuesday.